Two common approaches to accounting for acquisition of additional shares in a subsidiary include:
A) the combined tranche method and the single-date method.
B) the step-by-step method and the combined tranche method.
C) the step-by-step method and the single-date method.
D) the step-by-step method and the equity method.

Question

Quizplus · Accepted Answer

The step-by-step method and the single-date method are two common approaches to accounting for acquisition of additional shares in a subsidiary. The step-by-step method involves incrementally adjusting the carrying value of the investment in the subsidiary with each additional purchase. The single-date method involves adjusting the carrying value of the investment in the subsidiary to fair value at the date of acquisition. The other choices either do not exist (such as the combined tranche method and the step-by-step method) or are not related to accounting for acquisition of additional shares (such as the equity method).

Two Common Approaches to Accounting for Acquisition of Additional Shares